PERTH (miningweekly.com) – Major Rio Tinto has entered into binding agreements to acquire all of the remaining shares of TSX- and NYSE-listed Turquoise Hill Resources, with that company’s board unanimously recommending the C$43-a-share cash offer.

The independent directors of Turquoise Hill, along with senior officers, have entered into voting support agreements with respect to all of the Turquoise Hill shares they own or control.

“This transaction will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project. Rio Tinto’s offer guarantees Turquoise Hill’s minority shareholders outstanding value through a significant all-cash premium for their shares,” Rio Tinto CEO Jakob Stausholm said.

“After extensive negotiations, the terms of the transaction are final and there will be no further price increase. We look forward to working with the Turquoise Hill board of directors to ensure Turquoise Hill shareholders are able to realise the significant and immediate value of the transaction.”

Rio said on Tuesday that the transaction delivered significant value to Turquoise Hill minority shareholders with the certainty of an all-cash offer of C$43 a share, which represents a premium of 67% to Turquoise Hill’s closing price of C$25.68 a share on March 11, the day prior to Rio Tinto’s initial public proposal to acquire Turquoise Hill.

Rio has agreed to provide Turquoise Hill with secured short-term liquidity during the transaction period of up to $1.1-billion, subject to certain pre-conditions, which would need to be repaid from an equity raising from shareholders in the first half of 2023 if the transaction is not approved by shareholders.

Turquoise Hill has estimated that it requires $3.6-billion of additional funding in total to complete the project. It aims to address this through a funding plan including renegotiating debt repayment dates, which requires the unanimous consent of participating lenders. The success of this debt renegotiation and certain other funding plans is uncertain and, if unsuccessful, could require further equity contributions from shareholders.

“Rio Tinto will work in direct partnership with the government of Mongolia and Erdenes Oyu Tolgoi to realise the full potential of the Oyu Tolgoi project for the benefit of all stakeholders. This transaction rewards all minority shareholders with an exceptional premium of 67% for their shares and brings the financial certainty necessary to ensure the Oyu Tolgoi project can be developed without having to ask minority shareholders to contribute further significant funds,” Rio Tinto Copper CEO Bold Baatar said.

Turquoise Hill told shareholders on Tuesday that the company’s Special Committee had unanimously recommended the acceptance of the offer, and had unanimously determined that the transaction was in the best interest of shareholders.

The company was recommending that minority shareholders vote in favour of the transaction.

The transaction will be implemented by way of a Canadian plan of arrangement and require the approval of 66.67% of votes cast by all shareholders of Turquoise Hill, including Rio Tinto, and the approval of a simple majority of the votes cast by minority shareholders of Turquoise Hill.

A special meeting of shareholders of Turquoise Hill to approve the transaction is expected as early as possible in the fourth quarter of 2022 and, if approved, the transaction is expected to close shortly thereafter.